Recent clinical results are supportive that induction of differentiation is an alternative approach for the treatment of some malignancies. Our studies are involved with gaining additional knowledge on the process of terminal differentiation, the mechanism of action of inducers, and finding clinically useful combinations of inducers. Studies were conducted to: a) study the metabolism of retinoic acid (RA), a potent inducer of differentiation; and b) conduct an extensive analysis of the nature of the interaction of combinations of inducers of differentiation. The human myeloid leukemia cell line, HL60, has been a useful model system for studying terminal differentiation. Although many biological effects of RA have been described, the mechanism for these actions is unknown. We have now discovered that in many cell lines, a covalent bond is formed between RA and protein. In HL60 there is only one major retinoylated protein species and it is localized in the nucleus. Based on sensitivity to hydrolysis with either hydroxylamine or methanolic-KOH, the RA moiety is probably linked to protein via a thioester bond. Retinoylation occurs at very low concentrations of RA. Evidence supporting a functional role for this low-level retinoylation is that combinations of RA and either dimethylsulfoxide, hexamethylene bisacetamide, or sodium butyrate synergistically induce differentiation of HL60 cells.